Government Contractors Must Inform Employees of Right to Unionize

One of Barack Obama's first official acts when he was sworn in as president was to sign Executive Order 13496, which mandated that all government contractors and subcontractors notify workers of their right to form a union and engage in collective bargaining. The political meaning of the action was immediately apparent. Obama's campaign had strong support from organized labor, and he was giving something back as a symbol of his intention to follow-through with the pro-labor platform on which he campaigned.

It took the Department of Labor more than 18 months to finalize the regulations to implement that order. In the meantime, some of the Obama administration's other promised labor reforms have stalled. But the DOL regulations, which apply to all companies that enter into new or modified government contracts after June 21 are being characterized as aggressively pro-union, and are likely to result in unexpected pitfalls for employers.

Cover Your Bases

A major problem employers face with the regs is the broad and somewhat vague posting requirement, which may lure them into unwitting violations. The regs require contractors to post the notice wherever the employer customarily posts notices to employees, as well as "in and about plants and offices where employees ... engage in activities related to performance of the contract." This differs from the requirements for posting notices of rights under other employment laws, such as Title VII and the Fair Labor Standards Act, both of which need only be posted in a "conspicuous place" within the workplace.

Merely posting the notice on the lunchroom bulletin board next to the rules against workplace harassment probably won't cover the employer's obligation under the DOL regs. But it is unclear how far the requirement extends. A literal reading of the regulations could require very extensive posting. For instance, if the contract involves shipment or delivery of a product, the notice would arguably need to be posted in the cab of the truck driver's vehicle, points out Douglas Darch, a partner at Baker & McKenzie.

"I think it was intentionally left this broad to extend the visibility of the posting and give unions the opportunity to use violations of the rule as leverage in an organizing campaign," Darch says.

Another vagary is the requirement that employers post the sign in any language spoken by a "significant portion" of the workforce. "Significant" is not defined in the regulations, leaving employers to interpret the regulation at their own peril.

Choose Your Words

Experts are also concerned with the wording of the notice.

"It's pretty strongly worded to encourage union organizing," says Fred Alvarez, a partner at Wilson Sonsini Goodrich & Rosati. "There is a long list of possible unfair labor practices, and it introduces those issues into the workplace in an abstract way."

A problem many see with the regulations is that employers will be required to inform employees about labor organizing and prohibited anti-union activities in workplaces where people may not be thinking about unionization at all. In the past, a notice of rights only had to be posted if an active organizing campaign was underway.

The notice could leave employees wondering whether the old workplace rules still apply. For instance, an employee may think that the notice supersedes existing no-distribution or no-solicitation rules, which are lawful under the National Labor Relations Act (NLRA).

"The section of the notice regarding strikes is written in a reserved tone," Darch says. "The part about employee rights is not. The right to discuss terms and conditions of employment with your co-workers and the right to make complaints are listed, but the qualifications on these rights are not."

At the very least, the notice will generate a lot of questions, many of which managers and supervisors may not be prepared to answer, especially given that the vast majority of workers performing federal contracts are not unionized and never have been. Employers need to give managers a crash course in how to respond to these inquiries in a way that discourages unionization without overstepping the bounds of the law. An employer who accidentally says the wrong thing could be charged with engaging in unfair labor practices.

"It's likely to provoke conversations that managers are not prepared for," Alvarez says. "You need to give your HR people and supervisors some training so they can be ready with a lawful response."

Prepare for Enforcement

At press time, the OFCCP had yet to institute any enforcement actions against contractors who are in violation of the notice requirement. However, all signs point to a high likelihood of aggressive enforcement.

The DOL had set June 21 as the date after which the regulations will apply to all new or modified contracts. Darch points out that shortly thereafter, the agency amended the minimum hourly rates for benefits required by the Service Contract Act. That change effected a small amendment to every federal service contract, and thereby made the posting requirement immediately applicable to many government contractors.

Experts predict that contractors are most likely to see enforcement actions when a violation of the notice rule is coupled with other violations. Enforcement is also more likely in a workplace where the employer has made no effort to comply, as opposed to a contractor who has technical violations of the posting requirements.

"Someday they're going to wake up and start enforcing this, so you have to make it part of your checklist for an OFCCP investigation," suggests Jeffrey Pagano, a partner at Crowell & Moring.

That is especially important given the heavy-handed penalty for noncompliance--suspension or cancellation of the contract and possible debarment from eligibility for future contracts.

Still, some predict that the posting requirement is not here to stay. Darch likens the executive order to President Clinton's effort in the 1990s to bar businesses that permanently replace striking workers from receiving federal contracts. A federal court ultimately determined that Clinton's order was preempted by the NLRA.

"When there's a threat of enforcement, there will be a legal challenge to the validity of the regulations," Darch says.